In this edition of The Capital Issue, we explore how two states are getting innovative and using supportive living facilities and Medicaid waivers to address the growing demographic of low- and moderate-income seniors in need of assisted living care. Relatedly, our senior living piece discusses the risks associated with acuity creep and how providers can be proactive. Our hospital article details the recently released Municipal Advisor Rule while our housing article examines how the recent Supreme Court ruling on disparate impact will affect developers. Finally, our Fiduciary Focus article discusses how expectations of fixed income returns should be adjusted in the face of a rising interest rate environment.
We hope you find these articles informative and please don’t hesitate to reach out to any of our authors should you have any questions. Separately, we kindly request that you help us continue to improve our newsletter by completing The Capital Issue reader survey. We value your feedback and in only a few minutes you can fill out our questionnaire and help us make the newsletter even more valuable for you.
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Nick Gesue, CEO
The Capital Issue: August-September 2015
In 2011, the Baby Boomer wave began to crash upon the shores of retirement. By 2030, 72.8 million Americans will be over the age of 65, an increase from 43.1 million in 2012. While developments in health care have added quality as well as quantity to the average lifespan, aging often still brings the need for assistance with Activities of Daily Living (ADLs). Many individuals retain the majority of their physical and mental abilities and yet still require some assistance with one to three ADLs. A segment of these individuals without the physical capacity to care entirely for themselves are low- to moderate-income seniors unable to afford traditional assisted living (AL) services. These individuals present an opportunity for operators and states to think creatively about how best to care for their financial, physical and mental needs.
Hospital bond financing is a complex undertaking that can present a number of unique challenges. That is why finding an investment bank with experience as a financial advisor and underwriter is important. An investment bank with these credentials should have a clear understanding of the borrower, underwriter, and investor perspectives, and as a result, know how to negotiate with each party.
Most individuals familiar with the senior living and long-term care industries have a solid understanding of the differences between acuity levels. Typically legally defined on a state-by-state basis, the terms independent living (IL), assisted living (AL), memory care (MC), and skilled nursing care are fairly straightforward on paper. What happens, though, when care isn’t as clear? What happens when an AL provider identifies a resident whose needs exceed their current level of care?
Although the original intent of the Fair Housing Act (Act) was to provide equal housing opportunities for protected citizens, the nation's neighborhoods are increasingly segregated into two groups, further perpetuating the prophecy of the 1967 Kerner Commission Report of "two societies, one black, one white—separate and unequal."
In December of 2008, the Federal Reserve (Fed) lowered the target fed funds rate to the historically low range of 0%-0.25%. This action was taken in an attempt to stimulate an economy in the pits of a recession and a financial system on the verge of collapse. Additional stimulus measures, frequently referred to as “quantitative easing,” were implemented over the following six years, with the goal of lowering long-term interest rates and increasing corporate and consumer borrowing.
The Fiduciary Focus